Copper, zinc jump as trade fears undershoot outlook
LONDON — Copper jumped to its highest in three weeks on Wednesday, boosted by a weaker dollar after a new round of USChina trade tariffs proved not as costly as expected.
China will levy tariffs on about $60 billion worth of US goods in retaliation for US tariffs on $200 billion worth of Chinese goods. Washington’s new duties, however, were set at 10% for now, rising to 25% by the end of the year, rather than starting immediately at 25%.
Benchmark copper on the London Metal Exchange (LME) surged to its highest since Aug. 29 at $6,145 a ton, ending 0.6% higher at $6,121.
Zinc, meanwhile, closed 3% higher at $2,434 per ton, its biggest advance in over a month.
“In some ways the bad news had been priced into the markets and, if anything, the news on trade had been slightly less severe than we had thought it would be,” said Capital Economic analyst Caroline Bain. “It’s still too early to talk about this as sustainable… It just seems to be a bit of a relief rally after all of the bad news.”
Base metals prices have slid this year, largely because of fears the US-China trade dispute could choke global economic growth and sap demand.
China is not afraid of “extreme measures” the US is taking in their trade war and will use the dispute as an opportunity to replace imports, promote localization and accelerate development of high-tech products, state media said.
The dollar index eased by 0.2% while risky assets such as global equities advanced.
On-warrant stocks of copper rose to 152,750 tons but are still down 55% from the 2018 peak touched in March.
Zinc stocks on the LME are near their lowest since April, whereas Shanghai Futures Exchange zinc inventories remain barely above a decade low.
The global zinc market deficit deepened to 32,500 tons in July, from 14,200 tons in June, according to data from the International Lead and Zinc Study Group.
On-warrant stocks of lead available to the market in LMEregistered warehouses jumped 18,850 tons, or 39%, to 67,125 tons.
This lifted on-warrant stocks from their lowest levels since January 2009.
Among other industrial metals, LME lead fell 2.4% to $2,025 a ton, clocking its first decline in six sessions.
Aluminum ended down 0.4% to $2,026 a ton; tin finished 0.5% lower at $18,870; and nickel rose 0.8% to $12,500. —